What can the province do?

British Columbia has been gripped by a housing affordability crisis that has deprived an entire generation of the ability to rent or own housing that fits their needs. Everyday, we talk to union members who are finding it increasingly difficult to afford life in in BC, and especially in urban centres like Metro Vancouver, Victoria and Kelowna. Workers are struggling to find housing for their families, leading many to move further away from work and others to leave the province altogether. B.C. is losing experienced workers and economic productivity.

Solving this crisis requires bold action to tackle loose regulation in the housing market that has allowed speculators and banks to reap immense profits on the backs of British Columbians. With the help of experts in the field, the BCGEU has come up with a plan that tackles the affordability crisis by curbing speculation and making investments into housing and infrastructure that benefits all British Columbians.

The problem?

Speculative investment in B.C. has made the province one of the most expensive places in the world to live—particularly in the Metro Vancouver area. Fewer working families and individuals are able to purchase a home than ever before. Homelessness is growing more widespread and increasingly severe. Even those with good jobs and stable incomes are now finding it difficult to rent.

Workers and residents need a new system that restores fairness, stability and security to our housing market and to the real estate transactions that shape it.

We need a plan that prioritizes healthy families and communities by investing in needed services and infrastructure for those that live here, that builds affordable housing for those that need it, and most importantly, that redefines the value of property in terms of its fundamental use as a place to live.

The cause?

While various factors contribute to rising housing prices in Vancouver, the most troubling and underlying cause of our situation is that housing and property is being treated primarily as a financial asset rather than as a place to live.

Our housing system and real estate market has become overpowered by a speculative purchasing environment and our current methods for regulation, planning and taxation have failed to manage the effects. The crisis is the result of three main factors:

The influence of external investment capital in the province

Increased mortgage lending and profit-driven financial institutions which are fueling the speculative frenzy

Poor real estate regulations and land-use policies that create opportunities for private profit at the expense of the public interest

While public attention has focused on the effects foreign investment has had in the region, the reality is that foreign investment is just the catalyst of the crisis while financial institutions have been the fuel. Banks and other financial institutions have fueled the crisis by approving larger mortgages than they would otherwise allow, spurring domestic buyers to chase property prices that would usually be regarded as high-end anomalies.

The increasing size of loans issued by financial institutions has manifested as a privately levied "tax" on renters. While speculators simply have to pay the principal on a loan to break even, the wildly increasing interest payments are borne by the occupants as higher rent payments.

This means that speculators profit from ever increasing real estate values, while the actual productive value of land – the rent it produces – is harvested by the lenders. These windfall gains are rarely taxed.

The underlying incentives for speculation in our marketplace are compounded by costly oversights in real estate regulations and land use policy. Poor zoning regulations in major urban centres has resulted in new opportunities for speculation, while our current property taxation system has failed to capture the gains in property value of developments near infrastructure built on the public dime.

The efforts made by municipal and provincial governments to solve the crisis to date have been piecemeal and ineffective. To fully address this crisis, we need a bold plan that rethinks the way we tax, regulate and build B.C.’s real estate sector.

The plan

Our vision for a more affordable B.C. rests on the assumption that being able to rent or own appropriate housing is a basic condition of the social contract for working people in a democracy. In the absence of a stable and fair-paying job, or faced with other adverse circumstances, we also hold that ours is a society where those who need help finding a safe and supportive place to live will be provided that publicly.

With these simple guiding principles in mind, we think that a meaningful plan for addressing B.C.’s housing and affordability crisis requires the following:

Reform property taxes to target speculators and raise funds for affordable housing and infrastructure. This reform would require the following:

Implementing a provincial land value capture tax to curb speculation and capture a portion of the value created in real estate by infrastructure projects paid for by the public

Reforming the property transfer tax to target high-end investors, capture windfall gains on investment properties, and remove loopholes that allow landowners to transfer property without paying tax by transferring shares in a corporation

Reform the Foreign Buyers Tax to add a surcharge on those owners who do not reside and earn income in B.C.